India's services activity collapses as country shuts down to battle the coronavirus, a private survey shows - CNBC

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People strand the White Round mark area and bay the Vegetables during the first day of a 21-day government-imposed nationwide lockdown as a preventive measure against the COVID-19 coronavirus in Kolkata on March 25, 2020.

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India's services industry registered an "extreme decline" in activity last month after the country was locked down to stem the spread of the coronavirus disease, according to a private survey by IHS Markit.

The IHS Markit India Services Business Activity Index for April came in at a shocking 5.4 — far below a Reuters poll forecast of 40 and the previous month's 49.3, the latest data released on Wednesday showed.

A reading above 50 indicates expansion, while below 50 represents contraction.

In a statement accompanying the data release, IHS Markit described last month's reading as an "extreme decline" and "the most severe contraction in services output since records began in December 2005."

Approximately 97% of survey respondents observed a reduction in output, highlighting the widespread impact of the COVID-19 pandemic.

IHS Markit

It explained that measures such as movement restrictions and shutdown of businesses contributed to the fall in demand and output at "unprecedented rates."

"According to panellists, activity fell severely as a result of the nationwide lockdown, leading businesses to shut down their operations as demand collapsed," IHS Markit said in the statement.

"Approximately 97% of survey respondents observed a reduction in output, highlighting the widespread impact of the COVID-19 pandemic," it added.

The Indian government led by Prime Minister Narendra Modi imposed a nationwide lockdown in late March, but has extended it twice since then. Over the weekend, Reuters reported that India was going to prolong its lockdown — which was supposed to end in early this month — for another two weeks.

The country — which has the world's second largest population — has reported 49,391 cases of the coronavirus, according to the Ministry of Health and Family Welfare. Of those, more than 14,000 have recovered and 1,694 died, the data showed.

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